As nations around the world strive to attract foreign direct investments, the Arab Gulf stands out as being a strong prospective destination.
To look at the suitableness of the Arabian Gulf being a location for foreign direct investment, one must assess whether the Arab gulf countries give you the necessary and adequate conditions to encourage direct investments. One of many important criterion is political stability. How can we evaluate a state or even a region's stability? Governmental security depends to a large extent on the content of people. People of GCC countries have a great amount of opportunities to greatly help them attain their dreams and convert them into realities, making a lot of them satisfied and happy. Also, global indicators of political stability show that there has been no major political unrest in in these countries, and also the occurrence of such an possibility is highly unlikely provided the strong political will and also the farsightedness of the leadership in these counties specially in dealing with crises. Furthermore, high rates of misconduct can be extremely harmful to international investments as potential investors dread hazards such as the obstructions of fund transfers and expropriations. However, when it comes to Gulf, political scientists in a study that compared 200 counties classified the gulf countries as a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would likely attest that a few corruption indexes concur that the Gulf countries is enhancing year by year . in cutting down corruption.
The volatility of the exchange prices is one thing investors just take into account seriously as the unpredictability of exchange rate changes may have a visible impact on their profitability. The currencies of gulf counties have all been pegged to the United States dollar since the mid 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah may likely see the pegged exchange rate as an important attraction for the inflow of FDI in to the region as investors don't need to worry about time and money spent manging the forex uncertainty. Another important advantage that the gulf has is its geographical position, situated at the intersection of three continents, the region serves as a gateway towards the rapidly growing Middle East market.
Countries all over the world implement various schemes and enact legislations to attract international direct investments. Some nations for instance the GCC countries are increasingly implementing pliable legislation, while some have cheaper labour expenses as their comparative advantage. Some great benefits of FDI are, needless to say, shared, as if the international corporation finds reduced labour costs, it will likely be able to reduce costs. In addition, in the event that host country can give better tariffs and savings, the business could diversify its markets via a subsidiary. Having said that, the state should be able to grow its economy, develop human capital, enhance job opportunities, and provide access to expertise, technology, and abilities. Hence, economists argue, that oftentimes, FDI has generated effectiveness by transferring technology and knowledge to the host country. Nevertheless, investors consider a numerous factors before making a decision to invest in a country, but one of the significant variables which they consider determinants of investment decisions are location, exchange volatility, governmental stability and government policies.